The new inflation figures pave the way for interest rate cuts as early as May, many believe.
The Riksbank themselves believe that it will take until 2025 – but saying so could become a self-fulfilling prophecy, say critics.
– The risk is that inflation expectations are inflated and that you give the impression that inflationary pressure is higher than it is, says Robert Boije, Chief Economist at SBAB.
Monday’s inflation figures gave new hope for those who want to pay less for their mortgages. The fact that inflation in December was 2.3 percent means that most people now believe that the Riksbank will lower the interest rate already in May.
However, the Riksbank’s forecast is in contrast to that and their forecast is that interest rate cuts will only become relevant next year. The chief economist at one of Sweden’s largest banks believes that it can make it more difficult to bring down inflation.
– The risk is that there is too much warning that inflation is still at a high level, even though it is believed that it is on the way down, and that the interest rate should remain at a high level. That you tighten inflation expectations and that you give the impression that inflationary pressure is higher than it is, says Robert Boije, Chief Economist at SBAB.
“Too much focus”
If you exclude the energy figures, the rate of price increase is higher and the decline in the rate of inflation is not as great. That worries the Riksbank, but not Robert Boije.
– There is too much focus on this underlying measure of inflation. When inflation falls, this measure also usually falls, but with a delay of about three months, and I think we will see that as well.
In order to lower the interest rate, it is required that inflation is not only on the way down, but that it also permanently stays close to the target, according to the Riksbank.
– It is required that the good development actually continues, that inflation becomes low and stable, says Anna Breman, First Deputy Governor of the Riksbank.